The Code of Camaldoli , the Christian Democrats and the pursuit of a ‘third way’ between the state and the market: A new industrial policy

Inspired by the encyclical Rerum Novarum and drafted at the end of the Second World War, the Code of Camaldoli became an economic bible for many Catholic politicians. In short, the Code applies the principle of subsidiarity to the economy. This means that, in the event of market failure, the state may intervene to address the economic outcomes. One successful application of these Catholic values was in the operation of the Italian Institute for Industrial Reconstruction in the 1960s. Currently, the export-led growth system is experiencing a period of crisis. To pull Europe out of stagnation, the EU should stimulate domestic demand. Many countries plan to rely on the state to achieve this objective. The EU could use the European Investment Bank Group and the European Stability Mechanism as an industrial policy instrument to oversee ‘European champions’ across a diverse range of sectors, with a particular focus on defence.